The Issue The issue in this case is whether the license of Allen Franklin Meredith (Respondent) should be disciplined by the Department of Insurance and Treasurer (Petitioner) for allegedly allowing others to use his general lines insurance agent license, and to sign his name to insurance policy applications while Respondent was not present, as more particularly set forth in the Administrative Complaint issued herein on or about October 12, 1989.
Findings Of Fact At all times material hereto, Respondent has been licensed, and eligible for licensure, in the State of Florida as a life and health insurance agent, health insurance agent, and a general lines insurance agent. During April, 1989, Respondent approached Gordon Rowan, owner of Gordon Rowan Real Estate and Insurance in Winter Haven, Florida, to inquire whether Rowan would assist Respondent in obtaining a renewal of his general lines insurance agent license. Respondent was residing with his family in Georgia at the time, and told Rowan that his Florida general lines agent license was about to expire, and he needed to get licensed with a Florida company in order to apply for renewal. Rowan agreed to pay for Respondent's renewal fee, and for licensing him with a Florida Company doing business through Rowan's agency. On or about April 30, 1987, Rowan applied to National Insurance Associates for licensure on behalf of Respondent, and paid the applicable license fee. On or about May 20, 1987, Respondent was licensed with National Insurance Associates as a general lines insurance agent, and his Florida general lines license was renewed. Respondent admitted in an affidavit executed on November 16, 1987, that he did authorize Rowan to use his general lines license from the beginning of May to the end of June, 1987, while he was still living in Georgia. This authorization was in exchange for Rowan's assistance in obtaining Respondent's licensure with National Insurance Association, and renewal of his Florida license. However, at hearing Respondent testified that he never authorized Rowan to "use" his license, only to "place" his license with Rowan's agency. Rowan testified that Respondent had, in fact, told him that he could use his license and write business under it, including signing Respondent's name to policy applications, even though Respondent was not in the office and did not participate in these transactions. Rowan's assistant, May Satava, was present when Rowan and Respondent discussed their arrangement, and confirmed Rowan's testimony. Based upon the demeanor of the witnesses, as well as the affidavit executed by the Respondent shortly after the events involved in this matter, it is found that Respondent's uncorroborated testimony at hearing is not credible, while that of Rowan and Satava is found to be credible and consistent with statements made to Luis Rivera, the Petitioner's investigator, in October, 1987. Respondent did tell Rowan that he could use his general lines license to write business, and to sign his name to applications in exchange for Rowan's assistance in obtaining the renewal of his Florida general lines agent license. Working under Rowan's control and supervision, Satava did sign Respondent's name to approximately 48 policy applications from May through July, 1987, while Respondent actually signed only 3 additional policy applications during this period. Thus, the vast majority of business written under Respondent's license during this time was actually completed by Satava, an unlicensed person working under the control and supervision of Rowan, without any involvement of Respondent, pursuant to his agreement with Rowan that Rowan could use his license. Respondent did receive a commission payment in the amount of $200 from Rowan for June and July commissions. This represented Rowan's estimate of a reasonable payment to Respondent for the use of his license during this time when Satava signed Respondent's name to approximately 48 policy applications.
Recommendation Based upon the foregoing, it is recommended that Petitioner enter a Final Order suspending Respondent's general lines agent license, and eligibility for licensure, for a period of six months. DONE AND ENTERED this 9th Florida. day of March, 1990 in Tallahassee, DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 9th day of March, 1990. APPENDIX Rulings on the Petitioner's Proposed Findings of Fact: 1-2. Adopted in Finding 1. Adopted in Finding 2. Adopted in Finding 3. 5-6. Adopted in Finding 6. Adopted in Finding 7. Adopted in Finding 8. Respondent did not file Proposed Findings of Fact. COPIES FURNISHED: Gordon T. Nicol, Esquire 412 Larson Building Tallahassee, FL 32399-0300 Allen Franklin Meredith 140 Flamingo Drive Auburndale, FL 33823 Don Dowdell, Esquire General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300
The Issue Whether the Petitioner's application for licensure as a nonresident general lines insurance agent and a nonresident surplus lines insurance agent should be approved or denied.
Findings Of Fact On August 4, 2006, the Petitioner filed an application for licensure as a "09-20" nonresident general lines insurance agent and a "91-20" nonresident surplus lines insurance agent. By Notice of Denial dated December 11, 2006, the Respondent denied the Petitioner's application for licensure. The Notice of Denial, in material part, sets forth the factual basis for the denial as follows: You, Brian D. Boneck, at all times pertinent to the facts set below, were licensed in this state as a resident general lines insurance agent. You, Brian D. Boneck, at all times pertinent to the facts set forth below, were the owner of Brooke Agency Services of Bradenton, Florida. You, Brian D. Boneck, at all times pertinent to the facts set forth below, were the President and owner of Sierra Insurance Underwriters, Inc. On or about the last week of December, 2005, Christopher Waters of Port Charlotte, Florida, called the Brooke Agency in Bradenton, Florida, and spoke to you, Brian D. Boneck, regarding the renewal of a commercial general liability insurance policy for Waters Developers, LLC. On or about, January 4, 2006, Mr. Waters delivered a check to you in the amount of $809.30, payable to Sierra Underwriters. This check was to pay the down payment on the premium for renewal of Mr. Waters' general liability policy. Sometime in April 2006, Mr. Waters was notified by Mid-Continental [sic] Casualty Company that the policy was cancelled for non-payment of premium. You, Brian D. Boneck, failed to submit the money paid to you by Mr. Waters to the insurer, Mid-Continental [sic] Casualty Company, or to the insurer's general agent, Florida Homebuilders Insurance Agency, Inc. You, Brian D. Boneck, misappropriated the down payment made to you by Mr. Waters. To this date, you have not returned the money to Mr. Waters or paid the money to Mid- Continental [sic] Casualty Company, or to the Florida Homebuilders Insurance Agency, Inc. Your ownership of Brooke Agency Services of Bradenton, Florida, was through a franchise agreement with Brooke Franchise Corporation. Brook Insurance and Financial Services is a subsidiary corporation that manages business for Brooke Franchise Corporation. Pursuant to this relationship, you, Brian D. Boneck, were required to pay a share of the commissions received by Brooke Agency Service of Bradenton to Brooke Insurance and Financial Services and were required to provide information on insurance sales to Brooke Insurance and Financial Services. According to a sworn affidavit by Marian Ann Eupizi, who was formerly employed by you at Brooke Agency Services, you, Brian D. Boneck, also misappropriated premium payments made to you by other customers whose insurance was written by you or other agents of Brooke Agency Services of Bradenton, Florida, through the Florida Homebuilders Insurance Agency. You, Brian D. Boneck, did this by having customers write premium checks payable to your other company, Sierra Insurance Underwriters, Inc. By doing so, Brooke Insurance and Financial Services was unaware of your actions and you also misappropriated commissions owed to them. Also according to Ms. Eupizi, you, Brian D. Boneck, in mid- 2005, misappropriated a refund check issued for a policy on Callis Construction in the amount of approximately $1200. The Respondent offered no reliable evidence at the hearing to support the allegations which served as the factual basis for the denial. As to the allegation that Christopher Waters delivered the check to the Petitioner, the Respondent offered only the sworn affidavit of Mr. Waters and various attachments in support of the allegation. At the hearing, the Petitioner testified that he did not accept premium checks from customers and that the office staff accepted and processed premium checks. The Respondent offered no credible evidence to the contrary, and, for purposes of this Order, the Petitioner's testimony is credited. The Petitioner testified that the Waters account was one of 35 transferred to the corporate franchisor when the Petitioner sold the agency back to the Brooke Agency Services. Negotiations for the sale occurred over a period of time and concluded with a bill of sale executed in August 2006. Although the Petitioner's testimony regarding the chronology of the sale was poorly defined, there was no evidence that the Waters account was not included within those transferred. As to the allegation that the premium was misappropriated and not forwarded to Mid-Continent Casualty Insurance Company, the Respondent offered a copy of a sworn statement wherein a Mid-Continent Casualty representative alleged that the company's investigation indicated that the Waters premium was never forwarded through the Brook Agency to the Florida Homebuilders Insurance Agency, which initially issued and then ultimately cancelled the policy. Additionally, the Respondent offered a copy of an email to the Respondent's investigator from a representative of Florida Home Builders Insurance, Inc., wherein the representative restates information provided to the email writer from unidentified representatives of the Brooke Agency and AmGro Premium Finance Company (with whom the remaining premium due from Mr. Waters had been financed). The Respondent also offered banking records apparently provided in response to a subpoena that indicate the Waters check was deposited into the Sierra Insurance Underwriters Account, to whom the check was made payable. The Respondent offered no credible evidence that the deposit of the Waters check into the Sierra account was improper. As to the allegation that no money had been refunded to Mr. Waters as of the December 11, 2006, Notice of Denial, the Petitioner testified that the money was refunded by a check to Mr. Waters and had a check to Waters Developers from Sierra Underwriters, Inc., dated July 24, 2006, for $1,471 admitted into evidence. It is unclear why the refund amount exceeded the initial premium amount, but there is no evidence contrary to the Petitioner's testimony that the check was issued as a premium refund. As to the allegations related to the ownership structure of the Petitioner's agency, the Respondent offered no credible evidence regarding the interrelationship between the Brooke entities or how the Brooke entities operated with the Petitioner’s Sierra Underwriters, Inc. Regarding the allegations attributed to sworn affidavit of Marian Ann Eupizi, the Petitioner testified that Ms. Eupizi was a customer service representative who was not involved in the fiscal operation of the agency and whom he had fired for falsification of documents. There was no credible evidence contrary to the Petitioner's testimony, and it is credited. Ms. Eupizi’s affidavit has been disregarded in its entirety. There was no credible evidence to support the assertion in the affidavit that the Petitioner misappropriated premium payments from other customers, misappropriated commissions due to Brooke Insurance and Financial Services, or misappropriated a refund check to an entity identified as Callis Construction.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order granting the application of Brian D. Boneck for licensure as a nonresident general lines insurance agent and a nonresident surplus lines insurance agent. DONE AND ENTERED this 18th day of September, 2007, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of September, 2007. COPIES FURNISHED: Brian D. Boneck 70 East Horizon Ridge Parkway, No. 140 Henderson, Nevada 89002 William Gautier Kitchen, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Sumner, General Counsel Department of Financial Services The Capitol Plaza Level 11 Tallahassee, Florida 32399-0307
Findings Of Fact Petitioner is the state agency in Florida responsible for the regulation and licensing of general lines insurance agents. Its responsibility includes the duty to sanction those licensed under the insurance code for violations of the code. At all times relevant, Respondent was a licensed general lines insurance agent and possessed license #265736194 issued by the Petitioner on December 21, 1990. Respondent's license is presently active. On June 5, 1992, an order of liquidation, injunction and notice of automatic stay was entered in Case No. 92-1766, Circuit Court, Leon County, Florida, In Re: The Receivership of First Miami Insurance Company, a Florida corporation. On December 14, 1992, Salma Zacur, the operations manager for the receiver for First Miami Insurance Company, mailed a letter to Respondent. On June 7, 1993, a summary order directing immediate delivery of funds was entered in Case No. 92-1766, Circuit Court, Leon County, Florida, In Re: The Receivership of First Miami Insurance Company, a Florida corporation. On June 8, 1994, an order on receiver's motion for entry of final judgment was entered in Case No. 92-1766, Circuit Court, Leon County, Florida, In Re: The Receivership of First Miami Insurance Company, a Florida corporation. Petitioner failed to produce evidence of the contents of the December 14, 1992 letter which was non-hearsay and, therefore, failed to establish the relevance of the court orders of June 7, 1993 and June 8, 1994 in this matter. The Petitioner failed to present clear and convincing evidence that Respondent violated Section 631.155, or Chapter 626, Florida Statutes.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department enter a final order dismissing the Administrative Complaint filed against Respondent. DONE and ENTERED this 23rd day of August, 1995, in Tallahassee, Florida. DANIEL M. KILBRIDE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of August, 1995. APPENDIX The following constitutes my specific rulings, in accordance with Section 120.57(1)(b)9., Florida Statutes. Proposed findings of fact submitted by Petitioner. Accepted in substance: paragraphs 1, 2, 3, 4, 5, 7 (in part), 12 (in part). Rejected as not proven by clear and convincing evidence: paragraphs 6, 7 (in part), 8, 9, 10, 11, 12 (in part) 13. Proposed findings of fact submitted by Respondent. Accepted in substance: paragraphs 1, 2, 3, 4, 5, 6, and 7. COPIES FURNISHED: Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner Acting General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300 Michael K. McCormick, Esquire Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0300 Jed Berman, Esquire Infantino and Berman O. Drawer 30 Winter Park, Florida 32790
The Issue The issue for consideration in this case is whether Respondent's license as an all lines insurance adjuster in Florida should be disciplined because of the matters alleged in the Administrative Complaint filed herein.
Findings Of Fact At all times relevant to the issues herein, Petitioner, Department of Insurance, was the state agency in Florida responsible for the licensing of insurance agents and adjusters in this state and the regulation of the insurance profession therein. Respondent was licensed as an all lines insurance adjuster in Florida, and had been for approximately eight to ten years. On May 15, 1997, Respondent's home, located at 6617 North 23rd Street in Tampa, Florida, was damaged by fire, making it temporarily uninhabitable by Respondent and his two sons. As a result, Respondent arranged for his two sons to reside temporarily with a friend, Ms. Wanda McLendan. Though no formal written agreement was entered into between them, Respondent claims he verbally agreed to pay her $45.00 per day for the housing of his two sons. Respondent rented quarters for himself at the AmeriSuites Motel on North 30th Street in Tampa for the night of May 16, 1997, for which he was charged and paid $88.48. Commencing on May 17, 1997, Respondent moved into the DoubleTree Guest Suites Motel near Busch Gardens in Tampa, for which he paid $79.00 per night, plus tax. He remained at that facility until he checked out on June 9, 1997. Over the period he remained there, Respondent paid a total of $2,052.04 for room, taxes, and phone calls. All charges to both facilities were placed on Respondent's American Express card. Respondent submitted these charges to USAA, his insurance company, under that provision of his homeowner's policy which provided coverage for living expenses caused by property loss, up to $18,800 over a total of 12 months. These charges were reimbursed to him. On July 27, 1997, Respondent forwarded to USAA a claim for further additional living expenses which allegedly arose out of the loss of use of the property due to the fire. In the cover letter which constituted the claim, Respondent indicated that on June 9, 1997, he and his family moved into a townhouse located at 5231 Tennis Court Circle in Tampa, which was owned by a friend, Linda Akins. Accompanying the letter was an extract of the pertinent insurance policy and a statement dated June 9, 1997, allegedly signed by both Respondent and Ms. Akins, whereby Respondent agreed to rent the subject property for $220.00 per day, including furniture and utilities. There was to be no deposit or lease. Also accompanying the claim letter were photo copies of four checks drawn on the First Union National Bank of Florida, numbers 1750, 1758, 1759, and 1761, in the amount of $3,080, $3,080, $3,080, and $1,320 respectively, made payable to Ms. Davis, signed by the Respondent, and dated June 22, and July 8, 21, and 26, 1997, all of which indicate they were in payment of rent for the property located at 5231 Tennis Court Circle. On July 30, 1997, Respondent sent another letter to Mr. Price at USAA in which he claimed additional living expenses for his two sons at the residence of a friend, Ms. McLendon, at a rate of $45.00 per day for the period from May 16, 1997, to June 9, 1997. Accompanying that letter was a photocopy of check number 1752, dated June 15, 1997, in the amount of $945, drawn on the same bank as the others, and payable to Wanda McClendon. This check bore the additional notation that it was for lodging for the two boys as alleged. When these two claims were received by USAA, because the checks attached thereto did not appear to have been negotiated, the company initiated an investigation to be conducted by Mr. Green, one of its investigators. Mr. Green reviewed the entire claim file and then interviewed both Respondent and Ms. Akins. Based on Green's review of the claim file and his interview of the individuals, he concluded that the claim was false in that the expenses claimed had not been incurred. USAA requires that to be reimbursed to a policy holder, the expenses claimed have to have been actually incurred, but the policy does not define the term "incurred expenses." At the hearing, Ms. Akins indicated that she had been contacted by Respondent about renting her townhouse in question and she agreed to do so. They initially agreed upon a rental of $220.00 per day, she claims, but she also indicated Respondent agreed to pay to her in rent what he received from his insurance company. He gave her the checks which accompanied the claim, but asked her not to cash them because there was not enough money in the account to honor them, and she did not do so. She had rented the apartment to Respondent several years previously for a monthly rental of $400 to $475, but he contends, and she agrees, that this was only a part of the consideration paid for the rental. He also did some work around the property which, he contends, and she agrees, made up the balance of the consideration for the rental. No clear indication of what that work was, or its value, was presented, and it is found that the rental paid in the prior rental was considerably less that $220.00 per day and a claim for that amount is both unreasonable and unrealistic. Ms. Akins contends she ultimately received a cashier's check for $3,000 in rent from Respondent. Based on his conclusion that the claim was false, consistent with the requirements of the Department of Insurance, Theodore Hammer forwarded the claim to the Department for further action. Hammer, a fraud investigator for the Department, conducted additional inquiry into the claim, more specifically into the second claim regarding the payment to Ms. McClendon. During the interview with Ms. McClendon, she indicated she had agreed to Respondent's sons staying with her for a while, but they did not discuss any fee for this and he did not give her the check for $945.00. At hearing, Ms. McClendon also contended that the agreement with Respondent called for him to pay her whatever he received from the insurance company. Respondent ultimately gave her a total of $225.00. Respondent claims that when his home burned on May 15, 1997, he initially moved, with his sons, into a motel where they all stayed for several nights. He then made an arrangement with Ms. McClendon for his sons to stay with her for $45.00 per day. There was no written contract. Respondent remained in a motel until he had charged all his credit card would allow. However, the receipts offered into evidence reflect the credit card used was an American Express card, and there is usually no credit limit on a card from that company. This inconsistency was not explored by either party. He reached an agreement, he claims, with Ms. Akins whereby he would pay her $225.00 per day for rent of her two- bedroom house which is what he asserts two rooms in a motel would cost. Review of the receipts for Respondent's stay at the AmeriSuites and the DoubleTree reflects a maximum of $88.00 per night at the former and about the same at the latter; a figure which, when doubled, will still total far less that $225.00. However, if cost of food is included in the tabulation of motel living expense, Respondent's claim is not too far off. Respondent estimated his stay in the Akins property would only be for a few weeks, but the repair process took far longer than expected. Finally, even though his house was not finished, he moved back in. When, during the investigation, Mr. Green asked Respondent for the cancelled checks to support his claim, Respondent did not know what he was talking about. There were no cancelled checks. He admits he had written the checks in issue, but had given them, as appropriate, to Ms. Akins and Ms. McClendon and had asked them not to cash them. Respondent, an insurance adjuster for a significant period of time before this incident, claims he did not understand that he could not be reimbursed for money he had not actually spent. He claims he did not intend to misrepresent the situation to the insurance company or to make a profit from the deal. His difficulty, he claims, lay in his poor letter-writing skills which permitted him to indicate in the claim letter that the check copies he had enclosed were cancelled. Though he is not sure what the insurance company policy on payment of claims was, he contends he understood the company would pay for obligations he incurred, and he did not have to wait until he had satisfied these obligations before seeking reimbursement for them. Respondent asserts that when he submitted both claims letters, he did not mean to imply that he had paid the sums represented by the checks or than they had been cancelled. Respondent indicated he had agreed to pay his friends the same amount he was paying at the motel, but a review of the receipts reflects he paid for only one room each night at a rate far less than $225.00 per night. He claims, and his friends confirmed at hearing, that he had agreed to pay only what the insurance company would reimburse him, yet the agreement he submitted with the claim, purporting to bear the signature of Ms. Akins, is a blatant forgery. Further, his claim that his letter referring to the checks as cancelled was an ignorant and inartful use of words is disingenuous and unbelievable. Respondent's counsel contends that the policy in issue does not require the expenses claimed be actually paid before reimbursement, and that Mr. Green did not so indicate when he interviewed Respondent. However, at hearing Mr. Green unequivocally stated company policy that indicated they must be. In the balance, it is found that an insurance adjuster with the years of experience possessed by Respondent would know that. Further, Respondent's contention that the company's denial of the claim, and the resultant lack of loss to the company, when coupled with a lack of adjustment offer by the company, renders Respondent's conduct non-actionable is non-persuasive.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Insurance enter a final order in this matter suspending Respondent’s license as an all lines insurance adjuster for a period of twelve months. DONE AND ENTERED this 18th day of November, 1999, in Tallahassee, Leon County, Florida. ARNOLD H. POLLOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of November, 1999. COPIES FURNISHED: David W. Nam, Esquire David Busch, Esquire Department of Insurance 200 East Gaines Street 612 Larson Building Tallahassee, Florida 32399-0333 Christopher Clark, Esquire C. Laing Clark, P.A. 1958 West Dr. Martin Luther King Jr. Boulevard Tampa, Florida 33607 Daniel Y. Sumner, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0300 Bill Nelson State Treasurer and Insurance Commissioner Department of Insurance The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue Does Petitioner, Department of Financial Services (DFS), have authority to determine if Respondent, Alberto Luis Sotero (Mr. Sotero) and Respondent, FalconTrust Group, Inc. (FalconTrust), wrongfully took or witheld premium funds owed an insurance company while a civil action between the insurance company and Mr. Sotero and FalconTrust pends in Circuit Court presenting the same issues? Should the insurance agent license of Mr. Sotero be disciplined for alleged violations of Sections 626.561(1), 626.611(7), 626.611(10), 626.611(13), and 626.621(4), Florida Statutes (2007)?1. Should the insurance agency license of FalconTrust be disciplined for alleged violations of Section 626.561(1), 626.6215(5)(a), 626.6215(5)(d). 626.6215(5)(f), and 626.6215(5)(k), Florida Statutes?
Findings Of Fact Based on the testimony and other evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: Mr. Sotero is licensed by DFS as an insurance agent in Florida and has been at all times material to this matter. He holds license number A249545. FalconTrust is licensed by DFS as an insurance agency in this state and has been at all times material to this matter. It holds license number L014424. Mr. Sotero is an officer and director of FalconTrust and held these positions at all times material to this proceeding. Mr. Sotero also controlled and directed all actions of FalconTrust described in these Findings of Fact. Zurich American Insurance Company is a commercial property and casualty insurance company. FalconTrust Commercial Risk Specialists, Inc., and Zurich-American Insurance Group entered into an "Agency-Company Agreement" (Agency Agreement) that was effective January 1, 1999. The Agency Agreement bound the following Zurich entities, referred to collectively as Zurich: Zurich Insurance Company, U.S. Branch; Zurich American Insurance Company of Illinois; American Guarantee and Liability Insurance Company; American Zurich Insurance Company; and Steadfast Insurance Company. The Agreement specified that FalconTrust was an "independent Agent and not an employee of the Company [Zurich.]". . .. The Agency Agreement also stated: All premiums collected by you [Falcontrust] are our [Zurich's] property and are held by you as trust funds. You have no interest in such premiums and shall make no deduction therefrom before paying same to us [Zurich] except for the commission if any authorized by us in writing to be deducted by you and you shall not under any circumstances make personal use of such funds either in paying expense or otherwise. If the laws or regulations of the above state listed in your address require you to handle premiums in a fiduciary capacity or as trust funds you agree that all premiums of any kind received by or paid to you shall be segregated held apart by you in a premium trust fund account opened by you with a bank insured at all times by the Federal Deposit Insurance Corporation and chargeable to you in a fiduciary capacity as trustee for our benefit and on our behalf and you shall pay such premiums as provided in this agreement. (emphasis supplied. The Agency Agreement commits Zurich to pay FalconTrust commissions "on terms to be negotiated . . . ." It requires FalconTrust to pay "any sub agent or sub producer fees or commissions required." The Agency Agreement also provides: Suspension or termination of this Agreement does not relieve you of the duty to account for and pay us all premiums for which you are responsible in accordance with Section 2 and return commissions for which you are responsible in accordance with Section 3 [the Commission section.] The Agency Agreement was for Mr. Sotero and Falcontrust to submit insurance applications for the Zurich companies to underwrite property and casualty insurance, primarily for long- haul trucking. The Agency Agreement and all the parties contemplated that Mr. Sotero and FalconTrust would deduct agreed-upon commissions from premiums and remit the remaining funds to Zurich. On September 14, 2000, Zurich and Mr. Sotero amended the Agency Agreement to change the due date for premium payments and to replace FalconTrust Group, Inc. (FalconTrust) for FalconTrust Commercial Risk Specialists, Inc., and to replace Zurich-American Insurance Group and Zurich Insurance Company, U.S. Branch, with Zurich U.S. Mr. Sotero and Zurich's authorized agent, Account Executive Sue Marcello, negotiated the terms of the commission agreement as contemplated in the Agency Agreement. Mr. Sotero confirmed the terms in a July 20, 1999, letter to Ms. Marcello. The parties agreed on a two-part commission. One part was to be paid from the premiums upon collection of the premiums. The second part, contingent upon the program continuing for five years, was to be paid by Zurich to Mr. Sotero and FalconTrust. The total commission was 20 percent. FalconTrust and Mr. Sotero were authorized to deduct 13 percent of the commission from premiums before forwarding them to Zurich. The remaining seven percent Zurich was to pay to Mr. Sotero and FalconTrust at the end of the program or after the fifth year anniversary date. The letter spelled out clearly that Zurich would hold the money constituting the seven percent and was entitled to all investment income earned on the money. The passage describing the arrangement reads as follows: Our total commission is 20 percent however Zurich will hold and retain the first 7 percent commission where they are entitle [sic] to earn investment income. I understand that FalconTrust will not benefit from this compounded investment income. However you mentioned you would increase our initial commission that is set at 13 percent currently from time to time depending on FalconTrust reaching their goals, but it will never exceed a total commission of 20 percent. It is to our understanding that the difference will be paid at the end of the program or after the fifth year anniversary date being 12/31/2005, but not earlier than five years. I do understand that if Zurich and/or FalconTrust cancels the program on or before the fourth year being 12/31/2004 that we are not entitle [sic] to our remaining commission that you will be holding. If the program is cancelled after 12/31/2004 by FalconTrust and/or Zurich it is understood that all commission being held will be considered earned. (emphasis added.) Until the program ended, the parties conducted themselves under the Agency Agreement as described in the letter. At some point the parties agreed to decrease the percentage retained by Zurich to five percent and increase the percentage initially paid to and kept by FalconTrust to 15 percent. During the course of the relationship FalconTrust produced approximately $146,000,000 in premiums for Zurich. At all times relevant to this matter, all premium payments, except for the portion deducted by sub-agents and producers before forwarding the payments to Mr. Sotero and FalconTrust were deposited into a trust account. The various sub-agents of FalconTrust collected premiums and forwarded them to FalconTrust, after deducting their commissions, which were a subpart of the FalconTrust 13 percent commission. FalconTrust in turn forwarded the remaining premium funds after deducting the portion of its 13 percent left after the sub-agent deduction. This was consistent with the Agency Agreement and accepted as proper by Zurich at all times. All parties realized that the held-back seven percent, later five percent, was money that Zurich would owe and pay if the conditions for payment were met. The parties conducted themselves in keeping with that understanding. Mr. Sotero and FalconTrust described the practice this way in their Third Amended Complaint in a court proceeding about this dispute: "In accordance with the Commission Agreement, Zurich held the contingency/holdback commission and received investment income thereon." (Emphasis supplied.) In 2006 Zurich decided to end the program. In a letter dated December 8, 2006, Tim Anders, Vice President of Zurich, notified Mr. Sotero that Zurich was terminating the Agency-Company Agreement of January 1, 1999. The letter was specific. It said Zurich was providing "notification of termination of that certain Agency-Company Agreement between Zurich American Insurance Company, Zurich American Insurance Co. of Illinois, American Guarantee and Liability Insurance Co., American Zurich Insurance Company, Steadfast Insurance Company . . . and FalconTrust Grup, Inc. . . ., dated January 1, 1999, . . .." Mr. Sotero wrote asking Zurich to reconsider or at least extend the termination date past the March 15, 2007, date provided in the letter. Zurich agreed to extend the termination date to April 30, 2007. At the time of termination FalconTrust had fulfilled all of the requirements under the Agency-Agreement for receipt of the held-back portion of the commissions. Mr. Sotero asked Zurich to pay the held-back commission amounts. He calculated the amount to exceed $7,000,000. Zurich did not pay the held- back commission amounts. As the program was winding down and the termination date approached, FalconTrust continued to receive premiums. As the Agency Agreement and negotiated commission structure provided, FalconTrust deducted its initial commission from the premium payments. But, reacting to Zurich's failure to begin paying the held back commission amounts, Mr. Sotero engaged in "self help." He deducted at least $6,000,000 from the premium payments from customers, received and deposited in the trust account. He took the money as payment from Zurich of earned and held back commissions.3 Nothing in the Agency Agreement or negotiated commission agreement authorized this action. In March of 2007, Mr. Sotero and FalconTrust also brought suit against Zurich in the Circuit Court for the Eleventh Judicial Circuit, Miami, Florida. The issues in that proceeding include whether Mr. Sotero and FalconTrust wrongfully took premiums and how much Zurich owes them for commissions. As of the final hearing, that cause (Case Number 07-6199-CA-01) remained pending before the court and set for jury trial in August 2010. There is no evidence of a final disposition. But the court has entered a partial Summary Judgment determining that FalconTrust wrongfully took premium funds for the commissions that it maintained Zurich owed. The court's Order concludes that the issue is not whether Zurich owed money to FalconTrust, but whether FalconTrust was entitled to take the funds when it did. Like the undersigned, the court determines that it was not. Between December 8, 2006, the date of the cancelation letter, and April 30, 2007, the program termination date, Mr. Sotero and FalconTrust did not remit to Zurich any of the approximately $6,000,000 in premium payments received. Despite not receiving premiums, Zurich did not cancel or refuse to issue the policies for which the premiums taken by Mr. Sotero and FalconTrust were payment. The policies remained in effect.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services suspend the license of Adalberto L. Sotero for nine months and suspend the license of FalconTrust Group, Inc. for nine months. DONE AND ENTERED this 15th day of October, 2010, in Tallahassee, Leon County, Florida. S JOHN D. C. NEWTON, II Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of October, 2010.
The Issue Whether Respondent committed the violations alleged in Administrative Complaint? If so, what disciplinary action should be taken against her?
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Background Information Respondent is now, and has been at all times material to the instant case, licensed by the Department as a life and health insurance agent and as a general lines insurance agent. Respondent is now, and has been at all times material to the instant case, an officer and director of Prestige Insurance Consultants, Inc., (Prestige) and its only licensed insurance agent. Throughout the period of time material to the instant case, she had an extremely heavy workload requiring her, generally, to work at least 12 hours a day, seven days a week. Prestige Insurance Consultants, Inc., is an incorporated insurance agency with offices in Hialeah, Florida. It has been in business approximately five years. Count I On or about September 13, 1990, Mayra Loboguerrero requested Respondent to assist her in obtaining automobile insurance coverage for her teenage son, Andres Loboguerrero. During their meeting on this date, Respondent received from Ms. Loboguerrero a check made out to Prestige in the amount of $510.00 as a down payment on the premium that would have to be paid to obtain such coverage. The check was subsequently deposited in Prestige's bank account. To obtain the coverage that Ms. Loboguerrero had requested for her son, Respondent remitted an amount representing the difference between the down payment she had received from Ms. Loboguerrero and the commission Respondent and Prestige were due. The balance of the premium was financed by M.C.L., Inc., (M.C.L.) pursuant to a premium finance agreement executed by Andres Loboguerrero. The requested coverage was obtained from two separate insurance companies, Protective Casualty Company, which provided collision and comprehensive coverage, and Security National Insurance Company, which provided bodily injury and property damage coverage. The two companies issued their policies on October 17, 1990, and November 15, 1990, respectively. After Andres had signed the premium finance agreement, Ms. Loboguerrero advised Respondent by telephone that she wanted to prepay the total amount that was due M.C.L. to avoid having to pay the full finance charge and having to make monthly payments. Respondent, in turn, assured Ms. Loboguerrero that prepayment was an available option and that all Ms. Loboguerrero needed to do to exercise this option was to mail Respondent a check in the amount of $1,140. According to Respondent, she would "take care of the rest." Following her telephone conversation with Respondent, Ms. Loboguerrero made out a check to Prestige in the amount of $1,140 and mailed it to Respondent. Respondent received the check and, on or about October 30, 1990, deposited it in Prestige's bank account. Respondent, however, did not "take care of the rest," as she had promised. She inadvertently failed to remit the $1,140 to M.C.L. On November 26, 1990, a Notice of Intent to Cancel was mailed to Prestige and the Loboguerreros. The notice provided the following advisement: Installment in the amount of $169.24 due 11/20/90 has been in default for five (5) days. If payment of the amount of $179.24 is not received by 12/16/90 we will be obliged to cancel your policy (ies) as of this date without further notice. Such payment was not made. Accordingly, the automobile insurance coverage Ms. Loboguerrero had obtained for her son was cancelled effective December 23, 1993, "for non-payment of an installment in accordance with the conditions and terms of the premium finance agreement." A Standard Cancellation Notice advising of the cancellation was sent to Prestige and the Loboguerreros. Upon receiving this notice, Ms. Loboguerrero telephoned Prestige to inquire about the matter. In response to her inquiry, she was told that a "mistake" had been made. Based upon what she had been told, Ms. Loboguerrero assumed that the "mistake" would be corrected and that the coverage would be reinstated. 1/ No such corrective action was taken, however, as Ms. Loboguerrero discovered in March of 1991, when her son was involved in an automobile accident. Following the cancellation of coverage, the unearned premium, which amounted to $627.30, was returned to M.C.L. The return of the unearned premium left the Loboguerrero account with an unpaid balance of approximately $110.00, which M.C.L. subsequently recouped from Respondent. Respondent thereafter offered to reimburse Ms. Loboguerrero $818.00, which represented the unused portion of the funds Ms. Loboguerrero had paid to obtain automobile insurance coverage for her son. Ms. Loboguerrero, however, refused to accept anything less than $1,140, which was more than she was entitled to receive. Neither party was willing to compromise on the matter. Finally, Ms. Loboguerrero filed suit against Prestige in Dade County Court. On June 3, 1992, an Amended Final Judgment was entered in the case awarding Ms. Loboguerrero $818.00, plus prejudgment interest in the amount of $139.06. That same day, Respondent handed Ms. Loboguerrero a check in the amount of $957.06 to fully satisfy the Amended Final Judgment. Count II On or about April 13, 1991, Rahman Nisbet requested Respondent to assist him in obtaining automobile insurance coverage. During their meeting on this date, Respondent received from Nisbet a check made out to Prestige in the amount of $751.00 as a down payment on the premium that would have to be paid to obtain such coverage. The check was subsequently deposited in Prestige's bank account. To obtain the coverage that Nisbet had requested, Respondent remitted an amount representing the difference between the down payment she had received from Nisbet and the commission Respondent and Prestige were due. The balance of the premium was financed by M.C.L. The requested coverage was obtained from two separate insurance companies, Oak Casualty Insurance and Anglo-American Insurance. Thereafter, Nisbet received information from M.C.L. that the amount of the total premium for such coverage was well in excess of what he thought it was and what he was willing to pay. Accordingly, Nisbet wrote Prestige a letter indicating that he wished to cancel his coverage. Prestige received the letter May 16, 1991. It thereupon transmitted Nisbet's cancellation request to the insurance companies that had issued the policies Nisbet desired to cancel. The policies were subsequently cancelled. Following the cancellation of the policies, the insurance companies returned the unearned premiums to M.C.L. The return of the unearned premiums left the Nisbet account with an unpaid balance of approximately $155.00, which M.C.L. subsequently recouped from Respondent. Respondent offered to reimburse Nisbet $218.17, which represented the unused portion of the funds Nisbet had paid to obtain automobile insurance. Nisbet initially refused the offer because he believed, erroneously, that he was owed more than $218.17. On or about July 13, 1992, he accepted and cashed a check from Prestige in the amount of $218.17, but in so doing he made clear that he considered the $218.17 as merely partial payment of the monies owed him.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order (1) finding Respondent guilty of violating Section 626.561(1), Florida Statutes, as alleged in Count I of the Administrative Complaint; (2) penalizing Respondent for having committed this nonwillful statutory violation, not by suspending or revoking her license, but by requiring Respondent to pay, within 30 days of the issuance of its final order, an administrative fine in the amount $250.00 and by placing her on probation, on such terms and conditions as the Department deems appropriate, for a period of one year; and (3) dismissing the remaining allegations of misconduct advanced in the Administrative Complaint. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 11th day of May, 1993. STUART M. LERNER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of May, 1993.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: At all times material to this proceeding, Respondent was eligible for, and licensed as, an insurance agent in the State of Florida. The Respondent is currently eligible for, and licensed as, an insurance agent in the State of Florida. At all times material to this proceeding, Respondent was a licensed agent for United States Fidelity and Guaranty Company (USF&G). At all times material to this proceeding, Respondent was an officer, director, and stockholder of D.E. Brewer and Company (Company), an incorporated general lines insurance agency primarily located in Jacksonville, Florida. On or about April 24, 1986, the Company entered into an agency agreement with USF&G whereby the Company was given authority to solicit and sell insurance on behalf of USF&C. This agency agreement was cancelled unilaterally by USF&G on November 24, 1986. At all times material to this proceeding, all funds received by the Company on behalf of USF&G represented premium funds paid by consumers for the purpose of obtaining insurance and were trust funds received in a fiduciary capacity to be paid over to USF&G in the applicable regular course of business. Under the agency agreement with USF&G, accounts of premium funds received by the Company on behalf of USF&G were to be "rendered at the end of each month" and any "balance shown to be due to" USF&G was to "be paid to the designated reporting office not later than the twentieth day of the second succeeding month". On or about October 27, 1986, Southland Services of Jacksonville, Inc. (Southland) issued a check to the Company in the amount of $15,799.00 as a monthly installment for an auto policy and a general liability policy issued by USF&G. These premium funds were collected by the Company on behalf of USF&G. On or about November 21, 1986, Southland issued a check to the Company in the amount of $13,785.00 as a monthly installment for auto policy and a general liability policy issued by USF&G. These premium funds were collected by the Company on behalf of USF&G. On or about November 12, 1986, S. Gordon Blalock (Blalock) issued a check to the Company in the amount of $1,341.00 as a premium on an auto policy issued by USF&G. These premium funds were collected on behalf of USF&G. On or about December 3, 1986, USF&G notified Blalock that USF&G had not received the premium and unless Blalock remitted the premium within 15 days his policy would be cancelled. This matter was cleared up by Blalock with USF&G and the policy was not cancelled. On or about November 5, 1986, Anita Grusenmeyer, on behalf of Grusenmeyer & Associates, Inc. (Grusenmeyer) issued a check to the Company in the amount of $2,810.00 as a premium payment for insurance policies issued by USF&G. These premium funds were collected by the Company on behalf of USF&G. On or about December 15, 1986, USF&G requested documentation from Grusenmeyer as to proof of premium payment to the Company on these insurance policies since the Company had not rendered the premium payment to USF&G. This documentation was furnished and there was no interruption of the coverage. On or about November 24, 1986, USF&G unilaterally terminated its agency agreement with the Company due to the Company's failure to remit premium funds collected on behalf of USF&G. Prior to, and at the time of the termination of the agency agreement by USF&G, Respondent was Vice President, a director and stockholder (11%) of the Company, but on or about November 24, 1986, the date of the termination of the agency agreement, Respondent became president of the Company. By letter dated December 12, 1986 and addressed to Respondent, USF&G, under paragraph 9 of the agency agreement, made a demand on the Company for the records pertaining to business dealings between the Company and USF&G. This demand was again made by letter on January 21, 1987. However, there was some concern on Respondent's part in turning these records over to USF&G and it was determined that USF&G could make copies of such records with someone from the Company being present. Due to conflicts in schedules of both parties this was never accomplished, and, in the interim, USF&G concluded that it had the capability to reproduce the records on its computer. No further demand for the records was made and the records were never turned over to USF&G by the Company. Also in its letter dated January 2, 1987, USF&G advised the Company that the premium funds received in November, 1986, were overdue as well as the August, 1986, and October, 1986, account. The August, 1986, and October, 1986, account would be for premium funds received in June, 1986, and August, 1986, respectively. The September, 1986, account had been paid on or about November 20, 1986, using premium funds received from Southland on November 21, 1986, in the amount of $13,785.00 to cover a check previously issued by Donald Brewer on an account that did not have sufficient funds to cover the check. The deposit of the Southland check into the account made the check written by Donald Brewer "good". In accordance with the agency agreement, the premium funds received from Southland ($15,799.00) in October, 1986, were due and payable on December 20, 1986, and the premium funds received from Southland ($13,785.00), Blalock ($1,341.00) and Grusenmeyer ($2,810.00) during November, 1986, were funds due and payable on January 20, 1987. However, these premium funds had been disposed of prior to Respondent becoming president of the Company on November 24, 1986, and the Company having insufficient funds that could be used to pay USF&G after Respondent became president, the funds were not remitted to USF&G in the regular course of business set forth in the agency agreement. All the premium funds received by the Company from Southland ($15,799.00 and $13,785.00), Blalock ($1,341.00) and Grusenmeyer ($2,810.00) in October and November of 1986 were deposited in the Southeast Bank, N.A., of Jacksonville, Florida, Account No. 001632637, an account on which Respondent had no check writing authority. All of the above-referenced funds were deposited in that account prior to Respondent becoming president on November 24, 1986. The Respondent was not the responsible agent for the three insurance accounts: Southland; Blalock; and Grusenmeyer, and none of the premium funds remitted to the company by these accounts were "received by" the Respondent. There is no evidence that these premium funds were "received by" any employee of the Company who was under the Respondent's direct supervision and control. There is no evidence that Respondent had access to, or responsibility for, the premium funds paid by Southland, Blalock and Grusenmeyer during October and November of 1986. Likewise, there is no evidence that the Respondent diverted or appropriated any of such premium funds to his own use or to the use of anyone other than to those entitled to receive them. Upon becoming president, Respondent opened a new bank account with the Florida National Bank, but there was no evidence that the account ever had sufficient funds, other than possibly premium funds belonging to other insurers which had been received on their behalf by the Company, to pay USF&G the premium funds due it from the Southland, Blalock and Grusenmeyer accounts. There was evidence that the Respondent had paid salaries to the employees out of the account, but no amount was established. Upon becoming president, Respondent began negotiating a settlement with USF&G on the amount of premium funds due USF&G. There was a dispute as to the amount but a settlement of approximately $52,000.00 was reached. Some of this amount has been paid, but there is a remaining balance. There was no evidence that Respondent, prior to becoming President of the Company, took any part in the policy decisions or administration of the Company, such as determining the manner in which the Company's receipts would be spent or to direct, control or supervise the activities of the employees or other insurance agents of the Company.
Recommendation Based upon the Findings of Fact, Conclusions of Law, the evidence in the record and the candor and demeanor of the witnesses, it is RECOMMENDED that the Petitioner, Department of Insurance and Treasurer enter a Final Order dismissing all counts of the Administrative Complaint filed against the Respondent, John Lanahan, Brewer in Case No. 87-2692. Respectfully submitted and entered this 26th day of July, 1988, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of July, 1988. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 87-2692 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner Adopted in Finding of Fact 2, except that there was no evidence presented as to the types of insurance licenses Respondent held. Adopted in Finding of Fact 1. 3.-9. Adopted in Findings of Fact 3 through 9, respectively. 10. Adopted in finding of Fact 10 but clarified to show the date of the check to be November 12, 1986, rather than November 21, 1986. 11-14. Adopted in Findings of Fact 11 through 14. 15-16. Adopted in Finding of Fact 15. 17-18. Adopted in Finding of Fact 16. 19. Adopted in Findings of Fact 16 and 17. 20-22. Adopted in Finding of Fact 18. Adopted in Finding of Fact 19 and 22. Adopted in Finding of Fact 20 except that there is competent evidence to show that the Grusenmeyer payment was received and deposited prior to Respondent assuming the Presidency. Adopted in Finding of Fact 18. Adopted in Finding of Fact 23, but although there was a sincere dispute as to the amount there was no competent evidence that that amount was $200,000 or that the settlement figure of $52,000 was not a fair representation of the amount owed to USF&G by the Company. Specific Rulings on Proposed Findings of Fact Submitted by Respondent Adopted in Findings of Fact 1 and 2. Adopted in Findings of Fact 3, 19, and 24. Adopted in Findings of Fact 8, 9, and 19 but clarified. Adopted in Finding of Fact 18. Adopted in Finding of Fact 12. Adopted in Findings of Fact 18 and 19. 7-8. Adopted in Findings of Fact 12, 18 and 19. Adopted in Findings of Fact 20, 21 and 22. Adopted in Finding of Fact 23. 11-12. Rejected as being argument, not a finding of fact. COPIES FURNISHED: S. Marc Herskovitz, Esquire William W. Tharpe, Jr., Esquire 413-B Larson Building Tallahassee, Florida 32399-0300 Judith S. Beaubouef, Esquire Peter L. Dearing, Esquire Post Office Box 4099 Jacksonville, Florida 32201 Honorable William Gunter State Treasurer ana Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300
Findings Of Fact By letter dated December 27, 1977, VIRGINIA E. BELL, of VIRGINIA BELL REALTY, INC., forwarded to Mr. and Mrs. George Kuruzovich a contract for sale and purchase of real estate which had been executed by Robert and Patricia Gaudet. The cover letter from this respondent to Mr. and Mrs. Kuruzovich, stated that the contract provided for ". . . a net cash to you of not less than $7,500. This contract provided in paragraph twenty-two, "It is agreed that the seller shall net not less than $7,500 cash from sale herein upon closing." By letter dated January 3, 1978, Mr. George Kuruzovich informed Virginia E. Bell that the sellers approved the terms of the contract, with the understanding that they would receive net cash not less than $7,500. The contract dated December 27, 1977, was not consummated. However, a new contract, dated February 18, 1978, was executed by the sellers, George and Loretta Kuruzovich, with purchaser Patricia A. Gaudet. This contract likewise provided in paragraph twenty-two, ". . . sell [sic] shall net no less than $7,500 cash from sale herein payable upon closing." The contract dated February 18, 1978, was executed by all parties. The matter proceeded to closing, with the sellers authorizing Virginia E. Bell, to act as their agent. On May 4, 1978, Virginia E. Bell signed a letter to American Title Insurance Company stating that: "I, Virginia Bell, hereby certify that the proceeds of sale regarding the above captioned property is $7,053.34 and not $7,500.00 as required under the special provisions of the Sales Contract and that Virginia Bell Realty will assume any liability as far as payment concerning the net proceeds to Mr. and Mrs. George Kuruzovich, and furthermore, I will not hold American Title Insurance Company responsible for same." On May 4, 1978, the closing on the February 18, 1978, contract was consummated. Mr. and Mrs. George Kuruzovich, the sellers, received $7,053.34 in cash for the sale of their home. By letter dated May 5, 1978, to Mr. and Mrs. Kuruzovich the Respondent, Virginia Bell, explained that the cash discrepancy was due to prorations of $155 for taxes, $219.60 for interest in addition to the mortgage balance, and $94.22 for an FHA insurance premium paid by Respondent. In mitigation, Virginia E. Bell contends that she informed the sellers that the net cash required by the contract did not include tax, interest and insurance prorations, but this self-serving oral representation must be disregarded as contrary to the expressed terms of the contract and against the weight of the evidence. This respondent admits that the transaction which is the subject of this proceeding was not handled properly, and she asserts that it will not happen again.
Recommendation Upon Consideration of the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Virginia E. Bell be fined the sum of $500.00. It is further RECOMMENDED that the administrative Complaint against Virginia Bell Realty, Inc., be dismissed. THIS RECOMMENDED ORDER entered on this 16th day of September, 1980. WILLIAM B. THOMAS Hearing Officer Division of Administrative Hearings Room 101 Collins Building Tallahassee, Florida 32301 (904)488-1779 Filed with the Clerk of the Division of Administrative Hearings this 16thday of September, 1980. COPIES FURNISHED: S. Ralph Fetner, Esquire 2009 Apalachee Parkway Tallahassee, Florida 32301 Virginia E. Bell 1927 U.S. Highway 17 Orange Park, Florida 32073 George E. Marcellus 64 Sleepy Hollow Road Middleburg, Florida 32068
Findings Of Fact The Respondent, Robert Charles Anderson, currently is eligible for licensure and is licensed in this state as a life and health (debit) agent, life, health and variable annuity contracts agent, general lines property, casualty, surety and miscellaneous agent, and health insurance agent. The Respondent moved to Florida from Michigan in September, 1983. In January, 1984, the Respondent and a partner bought Guaranteed Underwriters, Incorporated, a corporate general lines insurance agency doing business as Security Insurance Agency (Security) in New Port Richey, Florida. The Respondent's background was primarily in the life and health insurance business; his partner's background was primarily in property and casualty insurance. They planned to divide responsibilities for Security's operations along the lines of their respective areas of expertise. However, the partnership dissolved, leaving to the Respondent responsibility for all of the operations of the agency. After the dissolution of the partnership, the Respondent delegated to unlicensed employees most of the day-to-day responsibilities for the property and casualty and workmen's compensation side of the agency's business. The Respondent was personally involved primarily in the day-to-day operations of the health and life insurance side of the business, as well as in selected large commercial accounts. The conduct of Security's business, as described above, went smoothly (there were no charges of any license violations) until two disruptive factors entered into the picture. One was financial in nature; the other was personal. In 1986, Security bought an existing insurance agency (Sunland Insurance Agency) in Holiday, merged it into Security, and attempted to operate it as part of Security's overall business. In 1987, Security bought another, large agency (Village Insurance Agency) and also merged it into Security and attempted to operate it as part of Security's overall business. At this point, the Respondent essentially was attempting to operate three insurance agencies, something he never attempted before. With the purchase of Sunland and Village, in addition to Security, the Respondent incurred significant debt which had to be met for his business to just break even. By approximately 1988, the Respondent owed approximately $150,000 still outstanding on the purchase of Security, $100,000 borrowed to finance the purchase of Village, $43,000 to three different relatives and $3,500 to the NCNB bank on loans made in connection with the business. Payments on these debts, together with payroll, rent and other business expense left Security with a monthly operating budget of almost $12,000. At this expense level, the business was losing money. In calendar year 1989, the business lost between approximately $12,600 and (counting unpaid bills outstanding at the end of the year) $17,900. At the end of 1988, severe personal problems added to the Respondent's financial woes. In December, 1988, the Respondent's wife had to be hospitalized in Tampa for eight weeks for treatment for symptoms of mental illness. During this time, in addition to trying to supervise the operations of Security, the Respondent was required to travel back and forth to Tampa (about an hour drive by car, each way) to visit his wife and also make arrangements for the care of his eighteen month old son (either by himself or by a baby-sitter). As if the Respondent's personal problems were not enough, when his wife was discharged from the hospital (with a diagnosis of a chemical imbalance), she informed him that she wanted a divorce. She took up a separate residence in Tampa where she lived pending the dissolution of the marriage. As a result of the his personal problems, the Respondent delegated more and more responsibility to his unlicensed employees. He would go to the office only for an hour or two a day. Sometimes he was not able to get into the office at all. Judy Nelson (Count V). Judy Nelson, who is self-employed doing business as Pedals 'N' Presents, used Security for her insurance needs since 1986. In January, 1989, she applied through Security for renewal of a special multi-peril (SMP) insurance policy with American Professional Insurance for another year beginning January 21, 1989. On January 10, 1989, she gave Security her check for $485 as partial payment for the coverage. The $485 was deposited into Security's general operating account which Security used to pay the operating expenses of the business. Security never processed Nelson's application or secured the coverage. On or about March 10, 1989, Nelson received notice from American Professional that no application for renewal of coverage or premium had been received and that coverage was being cancelled. Nelson immediately contacted Security regarding the notification, and one of the Respondent's unlicensed employees acknowledged an error on Security's part but assured Nelson that Security would correct the situation and have Nelson's coverage reinstated. Security never got the policy reinstated, and the policy was cancelled on March 21, 1989. On or about April 8, 1989, Nelson's business was burglarized, and Nelson made a claim on her MPS policy. At this point, in handling the claim, the Respondent realized that the policy had been cancelled and that Nelson had no coverage. But, instead of telling her the facts, the Respondent paid the claim himself. Nelson thought the claim was paid under the terms of her SMP policy and still thought she had coverage. Later, Nelson had a question about a signature on her policy and telephoned the Professional American to get her question answered. Professional American told her that she had no coverage. At about the same time, Nelson was contacted by a Department investigator, who asked her not to contact the Respondent yet as he would make arrangements for a refund for her. On or about December 6, 1989, after the Department investigator cleared it, Nelson telephoned the Respondent and asked for a refund. This time, the Respondent acknowledged that Nelson had no coverage and agreed to a refund. The Respondent paid Nelson the refund at the end of December, 1989, or the beginning of January, 1990. Nelson still does business with Security. She has in force workmen's compensation insurance through Security. Fred J. Miller (Count VI). On or about February 24, 1989, Fred J. Miller came into the Security offices to get commercial automobile insurance for the vehicles he uses in his recycling business. He dealt with one of the Respondent's unlicensed employees. Several application and other papers for coverage with Progressive American Insurance Companies were prepared and were signed by Miller. Miller also made a partial payment for the coverage in cash in the amount of $296, for which the employee gave Miller a receipt. As he left the office, the Security employee assured him that he had coverage. A few days later, on or about February 28, 1989, Security contacted Miller and told him an additional $606 was needed to obtain the coverage for which he had applied. Miller returned to Security and gave the employee he was dealing with an additional $606 cash, for which he was given another receipt. It was not proven, and is not clear, whether the cash received from Miller was placed in the Security operating account. Security never submitted Miller's application for insurance. Contrary to Miller's understanding, Miller had no insurance on his vehicles. As of April 6, 1989, Miller had neither a policy (or copy of one) nor an insurance identification card. On or about April 6, 1989, Miller bought a new vehicle and had to contact Security to get an insurance policy number in order to have the vehicle registered in his name. The Security employee speaking to Miller discovered that Miller's undated application still was in the "pending matters" file and told Miller he could not get the policy number at that time. Miller said he had to have the policy number immediately. At that point, the employee brought the problem to the Respondent's attention. The Respondent had the employee tell Miller they would call right back. Security then dated Miller's application April 6, 1989, telephoned Progressive American to secure coverage effective April 6, 1989, and called Miller back with the policy number he needed. Security then processed Miller's application to secure the coverage for a year, through April 6, 1990. Miller has renewed the Progress American coverage through Security and still has his vehicles insured under the policy. Donald E. Wilkins (Count IV). Donald E. Wilkins, President of Apple Paradise Landscaping, Inc., used Security for his general liability and automobile insurance needs. He has no complaint about, and no issue is raised in this proceeding, as to Security's handling of those coverages. (The evidence is that the coverages Wilkins applied for were placed in the normal course of business.) On or about March 9, 1989, Wilkins decided he wanted a workmen's compensation insurance certificate. He went to Security's office, and one of the Respondent's unlicensed employees completed an application for the insurance and for premium financing. Wilkins gave her a $250 check "just for the certificate." The check was deposited into Security's general operating account which Security used to pay the operating expenses of the business. On March 9, 1989, Wilkins also specifically requested that Security furnish to Hawkins Construction of Tarpon Springs, Florida, a certificate of insurance. In response to the request, Security furnished to Hawkins Construction a certificate that Apple Paradise with the "S. Atlantic Council on Workers Compensation." A policy number appears on the certificate, and the certificate states that coverage was effective March 13, 1989, to expire on March 13, 1990. There is no evidence that the Respondent personally was involved in providing this certificate of insurance. The evidence did not prove whether Wilkins ever got any workmen's compensation insurance. The Department proved that Security never processed the premium financing application, and Wilkins testified that he never got a payment book or other request for payment from any premium financing company. But the representative of the National Council on Compensation Insurance gave no testimony on Wilkins or Apple Paradise. Wilkins himself did not appear to have any complaint against the Respondent or Security. Theoharis Tsioukanaras (Count III). Theoharis (Harry) Tsioukanaras owned and operated Harry's Painting and Enterprises, Inc. He had been doing business with the Respondent to meet his business and personal insurance needs since the Respondent first bought Security (and did business with the prior owner for a year before that). He had his business and personal automobile insurance, as well as his workmen's compensation insurance through Security. In the normal course of their business relationship, either Harry would telephone Security when he had insurance needs or Security would telephone Harry when it was time to renew insurance. Harry would then drop by the office to complete the necessary paperwork and pay the premium. When Harry did not have the necessary premium money when it was time to buy or renew insurance, the Respondent regularly loaned Harry premium money and Harry would pay the Respondent back later. Harry usually dealt with the Respondent's unlicensed employees, not with the Respondent directly. On or sometime after July 7, 1989, Harry telephoned Security for proof of insurance on a 1987 Subaru so that he could avoid having to pay for lender insurance on the vehicle at a bank where he was seeking to obtain financing. One of the Respondent's unlicensed employees gave Harry a purported insurance identification card for "Progressive American," listing a purported insurance policy number and purported policy effective dates of July 7, 1989, to January 7, 1990. The lending institution did not accept the card. In fact, no Progressive American policy had issued on the vehicle. At some point, Harry came by the Security office and told the Respondent that he (Harry) was due a $640 refund for automobile insurance renewal premium money on a policy that never issued. By the Respondent's own admission, he checked with his records and his unlicensed employees and confirmed that Harry was owed the money. On September 28, 1989, he gave Harry a check for $640. 1/ Despite the circumstances that resulted in the false Progressive American insurance identification card, in Harry's need to buy Allstate insurance on a vehicle he thought was insured through Security, and in Harry's need for a $640 refund from Security, Harry continues to do his insurance business with the Respondent and Security and also refers friends to the Respondent for insurance needs. John Stuiso (Count I). On or about June 7, 1989, John Stuiso, a self-employed building contractor, applied for both general liability and workmen's compensation insurance through Security. (Stuiso had been insured through Security for the preceding four years with no apparent problems.) Stuiso paid Security $3,250 as partial payment of the premiums on the policies and also applied for premium financing through Security. At least $3,000 was paid by check; the evidence is not clear how the other $250 was paid. The $3,000 check was deposited into Security's general operating account which Security used to pay the operating expenses of the business. It is not clear what happened to the other $250. It was understood between Stuiso and Security that Security would have the applications processed and would inform Stuiso if there was any problem with coverage. Not having heard anything to the contrary, Stuiso believed he had the general liability and workmen's compensation insurance for which he had applied. In fact, Security never processed either application for insurance or either application for premium financing. In late July or early August, 1989, Stuiso requested that Security furnish a certificate of insurance for him to provide to a customer, APCO Building Systems of Oldsmar, Florida. On August 4, 1989, Security issued to APCO a certificate that Stuiso had both general liability insurance with American Professional Insurance Company and workmen's compensation insurance with "South Atlantic Council on Work Comp." Purported policy numbers also appeared on the certificate. When Stuiso never received a payment book for his premium financing, he became concerned about his coverage and was about to approach the Department for assistance when he received a telephone call from a Department investigator who had been investigating the Respondent (unbeknownst to the Respondent.) The investigator told Stuiso that he had no coverage. Stuiso then approached the Respondent and asked for a refund. The Respondent checked his records and asked his unlicensed employees about Stuiso's claim that he had paid for and applied for insurance that never issued. He learned for the first time the facts about Stuiso and immediately wrote Stuiso two refund checks, one for $3,000 and one for $250. Due to the financial problems the Respondent was having, his $3,00 check was returned for insufficient funds. The Respondent tried to borrow the money to cover the $3,000 check from a friend who declined on advice of counsel. Stuiso then went to the police and had the Respondent charged with writing a worthless check. The Respondent was advised of this and turned himself in to the police. He was given a week to make good on the check. The Respondent was able to borrow the money from another friend and paid Stuiso in full. However, his encounter with the police brought home to him the depths to which he had sunk. He decided to commit suicide by monoxide poisoning but changed his mind before it was too late. He telephoned his wife in Tampa to report what he had just done, and she initiated steps to have him committed involuntarily for treatment for mental illness under Florida's Baker Act. He spent four days in the Community Hospital in New Port Richey, Florida, where he was diagnosed as having "adjustment reaction." He was released to the custody of his wife and spent the next week to ten days with her in Tampa. After the Respondent recovered, he decided to do whatever was necessary to save his business and pay off his debts. He laid off office staff and, to take up the slack, himself assumed the responsibilities he had been delegating to his unlicensed employees. He also decided, in light of the Harry's and Stuiso matters, to himself investigate to see if there were any other Security customers who did not have insurance coverage for which they had paid. He found Wanda Mae Riley (Custom Plumbing of Pasco, Inc.). Wanda Mae Riley (Count II). In about August, 1988, the Respondent himself called on Wanda Mae Riley of Custom Plumbing of Pasco County to advise her that the company's general liability and automobile insurance policies for its fleet of four trucks were up for annual renewal on August 24, 1988. The Respondent filled out applications for renewal of the policies and for premium financing and accepted Riley's check in the amount of $3,244 as down payment for the renewal policies. The $3,244 was deposited into Security's general operating account which Security used to pay the operating expenses of the business. The Respondent telephoned American Professional Insurance Company to bind the coverage. He or his office also issued proof of insurance identification cards for Custom Plumbing. But, for reasons he cannot explain (having no recollection), he never processed the applications and the binders expired when the applications were not processed and policies were not issued in the normal course of business. Having had a lapse of memory as to the matter and as to Security's responsibilities to Custom Plumbing, the Respondent did not know and never told Riley or Custom Plumbing that the insurance policies were not renewed and that Custom Plumbing did not have the coverage it thought it did. Later in 1988, Security also arranged for workmen's compensation insurance for Custom Plumbing. The evidence did not prove that there were problems in the way Security obtained this coverage for Custom Plumbing. In approximately April, 1989, Custom Plumbing requested that Security furnish a certificate of insurance for him to provide to the Barnett Bank of Hernando County. On April 21, 1989, Security issued to the bank a certificate that Custom Plumbing had automobile insurance with American Professional Insurance Company. The expired binder number (which perhaps was the same as the policy number of the prior year's policy) appeared on the certificate as the purported policy number. There is no evidence that the Respondent personally was involved in providing this certificate of insurance. When, in approximately late October or early November of 1989, the Respondent discovered that Security had not obtained the coverages for which Custom Plumbing had made down payments in August, 1988, he telephoned Riley to inform her 2/ and tell her that he would refund the down payments Custom Plumbing had made in August, 1988. When the refund was not made promptly, Riley went to a lawyer to have a promissory note drawn for the Respondent's signature. The promissory note reflected the $3,244 the Respondent owed to Custom Plumbing, payable $500 a month. On or about December 9, 1989, the Respondent signed the note, which was paid in full in accordance with the terms of the note. (As previously found in Finding 14, by this time the Respondent also had heard from Nelson.)
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Petitioner, the Department of Insurance and Treasurer, enter a final order: (1) finding the Respondent, Robert Charles Anderson, guilty of the charges contained in Counts I, II, III, V and VI of the Administrative Complaint, as set forth in the Conclusions of Law, above; and (2) suspending the Respondent's licenses and eligibility for licensure for six months. RECOMMENDED this 28th day of May, 1991, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of May, 1991.
